New Delhi: India’s Serious Fraud Investigation Office (SFIO) is seeking a complete probe into Xiaomi’s business in the nation. The agency is seeking evidence that the Chinese smartphone company violated any rules of foreign investment, a government document quoted by Reuters said.
In India Xiaomi used to be the top selling phone brand. However, in recent years it has slipped and been eclipsed by Apple and Samsung’s market share. The company is also dealing with a handful of tax issues, which have created some trouble with the company disbursing royalty payments.
Investigators should closely watch the flow of money within the Indian business of SFIO, the report said. They also want the information whether the approvals were of the correct type before the investment in India by Xiaomi. This is an important consideration since the rules pertaining to investment by Chinese origin companies were tightened in India following the deadly border skirmishes in 2020.
Here are some things an investigator would investigate in the document. These encompass the actual ownership and control of Xiaomi in India, if ownership and control have shifted and whether it has been formally reported and if it has, whether it complied with the Indian foreign investment laws in general. In addition, the officials would also check out the deals that Xiaomi has made with online retailers such as Amazon and Flipkart, including the special product launches made via them.
Xiaomi has not received any official notification from the SFIO so far, says a spokesman for the firm. The spokesperson further said that Xiaomi always abides by the laws of the countries it operates in.
The foreign ministry of the People’s Republic of China was also questioned on it. He could not give any information on the incident but hoped that India will be fair and open towards companies from all countries, he said.
A decision on whether to conduct any full investigation is to be made by the SFIO’s parent, India’s Ministry of Corporate Affairs. There is no specified time for that decision. The SFIO would have broad latitude if it was given approval to search offices and arrests people and the process could be protracted for years.
This kind of scrutiny isn’t unique to Xiaomi. Other Chinese telecom companies such as Vivo, Oppo, have also faced investigation in India regarding its money movement. While many steps would take a long time to resolve, the Chinese tech companies have been under increasing pressure since 2020 from the regulators functioning in India.
